This article first appeared in the St. Louis Beacon, Jan. 2, 2012 - The thousands of poor St. Louis residents accustomed to calling the Human Development Corp. for heating, housing and health services had to get used to looking elsewhere by the end of the year. That's because HDC officially went out of business as winter approached.
State officials announced this week that they will seek proposals next month for setting up an agency to succeed HDC, which ran out of money. Its board voted in October to dissolve the agency and moved recently to liquidate HDC's assets with a promise to pay as many creditors as possible.
News that the anti-poverty agency was shutting its doors was a jolt for an agency that had served the poor as far back as 1964, the year it became the area's first federally designated community action agency.
But the action hasn't necessarily left the needy without help. Those needing assistance with utility bills can now turn to the Urban League, which agreed to take over HDC's Low Income Home Energy Assistance Program, or LIHEAP. Residents needing housing assistance or other services can them through the Community Action Agency of St. Louis County. It agreed to handle those functions temporarily for city residents until the state set up a new community action agency for St. Louis.
One big difference is that St. Louis is getting fewer dollars to serve its needy. That would have happened had HDC survived simply because the federal grants are smaller this fiscal year. State officials said it paid HDC $4.2 million for LIHEAP in the old fiscal year. In the current fiscal year, the Urban League announced that it had available $3.8 million, a difference of about $400,000.
In deciding to go out of business, the HDC board insisted that no money was misappropriated and that it was strapped for cash because it routinely tried to serve more clients than it could on limited funding. It had begun to overspend routinely and use part of the next year's budget to cover the shortfall. The agency usually had a budget of roughly $12 million in federal, state and city funding.
Read the Beacon's earlier story below:
About two years ago, Human Development Corp. officials appeared in a slick, eight-minute video offering an upbeat message that "we will always be there" to help the area's poor achieve a better life.
That pledge apparently came to an end this month. The beleaguered agency is broke and apparently out of business, the result of misspending and mismanaging tens of thousands of dollars in federal funds and failing to pay some vendors for services to the needy.
These developments have prompted state officials to try to take away HDC's designation as an official anti-poverty agency. But the HDC board is seeking to convince the state to soften its stance, saying that no money is missing, that the agency and dedicated workers have done a lot of good, and that the problem stemmed mainly from overspending to provide services.
On Friday evening, however, the Missouri Department of Social Services said it was standing by its call for HDC to relinquish voluntarily its Community Action Agency designation to allow the state to sign a contract with another social service provider. Before the start of the new federal fiscal year next month, the state will have new contracts in place for programs formerly run by HDC, said Seth D. Bundy, DSS spokesman.
Regardless of the outcome, the state of affairs at HDC has hurt people it was set up to serve when it became the area's first community action agency in 1964. In recent years, the agency says it has aided more than 100,000 needy residents annually in St. Louis and Wellston. The assistance has included helping the poor keep warm in winter, cool in summer, put food on their tables, clothing on their backs, stave off evictions for nonpayment of rent, and get job training and a range of other services.
This is not the first time HDC has faltered. Since the 1990s, the agency, headquartered at 929 North Spring Ave., has been forced to give up a weatherization program and some Head Start projects as a result of accusations of mismanagment. The agency's budget of roughly $12 million included about $4 million to process energy assistance grants. State officials say HDC put at risk thousands of households promised about $650,000 in heating aid. The Missouri Department of Social Services says HDC never transferred the payments to utilities. Luckily, the poor may never feel the impact of this inaction. Laclede Gas and Ameren have decided not to disconnect services to those in arrears because they say HDC's policies caused the problem.
"We'll continue to work with other agencies to make sure that every family has a warm home in the winter," a Laclede spokeswoman said.
United Way intervention
The impact of the loss of other services has been eased through intervention by St. Louis officials and by the United Way. The latter's network of social service providers will fill a need whenever another agency in the network falls short, said Cheryl Polk, executive vice president of United Way. She says United Way gets between 175,000 to 180,000 calls a year.
"Last year we provided about 4,400 referrals" to HDC, she says. "If one organization is not available, then we have another one to provide assistance."
Even so, HDC's inaction has caused some of the area's poor to fall through the safety net.
"I can tell you that this is a significant loss to the city," says William Siedhoff, director of the St. Louis Department of Human Services. "The Human Development Corp. certainly has made a contribution to people's lives. Now it's gone for the time being."
He called the loss "a real tragedy, a sad state of affairs that it would all come to this. I'm speaking now as someone involved in the provision of services and making sure people in the city have resources, a significant portion of which has disappeared overnight."
Services disrupted
Services that "disappeared" includes a homeless prevention and rapid re-housing program that HDC operated through a city contract. Under it, HDC made rent payments to landlords to keep people from being evicted.
"Because of the shutdown of services at HDC, some people suffered the consequences of actually being evicted because the payments were not made," Siedhoff says, though he said he didn't know how many families were affected. He said the city stepped in to provid some help because it still had about $1 million left on an $8 million federal stimulus grant that funded the program.
"We're issuing checks to landlords to avoid and avert any further evictions," he said. "But the consequences of closing of HDC has impacted significantly people in the community. They were promised some things and those promises weren't kept."
The city has voided its contract with HDC and shifted the program to Grace Hill Settlement House. So far, he says applications of about 30 clients have been processed. Sorting out the issues of who was affected and eligible hasn't been easy.
Households "in the process of applying for the benefits were left high and dry," he said. "We had to literally go in, identify who they were and attempt to follow through to make sure these individuals were held harmless. But that didn't happen because we were unable to act quickly enough to spare some people from actually being evicted from their homes."
Last week, the Missouri Department of Social Services declared that HDC was no longer able to provide services through the Community Block Grant program. HDC's board apparently thinks there's a chance to work out an agreement with state officials. Claude Brown, vice chair of the board, and former head of the local NAACP, says, "We're are working with the state to try to put together, not necessarily HDC but an entity, something like HDC. We're concerned about making sure clients get services they deserved and are served by an agency that has empathy for the poor."
How problems developed
Asked about how the agency came up short, Brown said, "There is no missing money. To explain it in a simple way, as more and more people fell into the poverty category, we were serving more people than we had resources for. We thought money would continue to come in. But when the cuts appeared both nationally and statewide" the agency "got caught up in not being able to replenish those funds."
Ultimately, the agency ran out of money to meet its payroll and pay some vendors, Brown said. He added that media reports about how the former executive director, Ruth Smith, handled some contracts were "a perception issue, but it is not an issue as far as the state and we are concerned."
Brown says the agency's problems "couldn't have happened at a worse time. In some ways, it is symptomatic of the times we live in. More services are needed while agencies all over the state and country are being affected by block grants being cut. The government just came out with new poverty numbers, meaning more people will need help, but the funds are not increasing to alleviate poverty."
Siedhoff, too, agrees that things might get worse before they get better.
"The big fear," he says, "is what's coming next. We've already seen some reductions in low-income energy assistance. That's just the beginning as I see it because down the road, with the super committee (in Congress) dealing with deficit reduction, everything is on the table."
The upshot, he says, is that programs affecting the needy will be among those cut to address the deficit.
"I just think in the next couple of years, we're going to see some very difficult times for cities in relation to poverty and social service needs at a time of diminished resources."
